China’s exports last month unexpectedly returned to growth after a shock decline in December last year, while imports fell much less than expected, but analysts said that the strength was likely due to seasonal factors and predicted renewed trade weakness ahead.
Investors and policymakers are closely watching to see how quickly activity in China is cooling, or if support measures announced last year are starting to take hold, which could lift some of the gloom hanging over the global economy.
However, data published yesterday left many China watchers none the wiser about the state of the world’s second-largest economy as a March 1 deadline looms for Beijing and Washington to de-escalate their bitter trade dispute.
Exports last month rose 9.1 percent from January last year, Chinese customs data showed, defying economists’ expectations of a 3.2 percent drop and a marked turnaround from a 4.4 percent decline in December.
Imports fell 1.5 percent, much better than the consensus forecast of a 10 percent slide and narrowing from a 7.6 percent drop in December. That left the country with a trade surplus of US$39.16 billion for the month.
While the readings appeared positive at first glance, analysts warned that data from China early in the year must be treated with caution due to business distortions caused by the long Lunar New Year holiday, which started on Feb. 4 this year.
Companies tend to rush out shipments or replenish their inventories of raw materials before the holiday.
“Clearly, the numbers surprised the market on the upside, but given the deceleration of global [factory readings] and weak [South] Korean trade data, it might be premature to conclude that the trade prospect has improved based on the January number alone,” said Tommy Xie (謝棟銘), China economist at OCBC Bank in Singapore.
“I suspect that the recovery may be partially due to the Chinese New Year effect as this year it is slightly earlier as compared to last year,” Xie said.
Economists had widely tipped that China would see weaker exports early this year.
Net exports dragged on China’s growth by 8.6 percent last year, Reuters calculations showed.
Factory surveys have also shown weakening domestic orders, and broader economic weakness is taking a toll on business and consumer confidence.
Retail sales during the Lunar New Year holiday grew 8.5 percent from a year earlier, still solid, but at the slowest pace since at least 2011.
China’s economic growth last year slowed to 6.6 percent, weighed down by rising borrowing costs and a clampdown on riskier lending that starved smaller, private companies of capital and stifled investment.
Pressure on the Chinese economy could spike if Beijing and Washington do not reach a deal soon to end their year-long trade dispute, which is estimated to have cost both countries billions of US dollars already and is taking a growing toll on other export-reliant economies from Asia to Europe.
The US is set to sharply raise tariffs on US$200 billion of Chinese imports on March 1, although US President Donald Trump on Tuesday said that he could let the deadline “slide for a little while” if a deal appears close.
China’s trade surplus with the US last month narrowed to US$27.3 billion, the lowest since May last year, yesterday’s data showed.
Exports to the US declined 2.4 percent year-on-year, while imports fell 41.2 percent.
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